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51job, Inc. Reports Third Quarter 2011 Financial Results
Nov 09, 2011 (03:11 PM EST)


SHANGHAI, Nov. 9, 2011 /PRNewswire-Asia-FirstCall/ -- 51job, Inc. (Nasdaq: JOBS), a leading provider of integrated human resource services in China, announced today unaudited financial results for the third quarter of 2011 ended September 30, 2011.

Third Quarter 2011 Financial Highlights:

  • Total revenues increased 26.4% over Q3 2010 to RMB343.3 million (US$53.8 million), within the Company's guidance range of RMB335 million to RMB345 million
  • Online recruitment services revenues increased 49.0% over Q3 2010 to RMB212.7 million (US$33.4 million)
  • Gross margin expanded to 72.4% compared with 68.4% in Q3 2010
  • Income from operations increased 62.8% over Q3 2010 to RMB112.2 million (US$17.6 million)
  • Fully diluted earnings per common share were RMB1.65 (US$0.52 per ADS)
  • Excluding share-based compensation expense and loss from foreign currency translation as well as their related tax impact, non-GAAP adjusted fully diluted earnings per common share were RMB1.89 (US$0.59 per ADS)
  • Cash and short-term investments increased to RMB1,919.4 million (US$300.9 million) as of September 30, 2011

Commenting on the results, Rick Yan, President and Chief Executive Officer of 51job, Inc., said, "Led by the diligent execution of our strategic plan, we achieved solid revenue growth and profitability in the third quarter. In the online business, we extended our dedicated sales coverage, which now serves 75 cities in China, and meaningfully increased average spending per employer.  We also saw strong growth in our other HR services as our outsourcing and training services gained traction with customers.  A longstanding leader and trusted brand in the HR services market in China, we continue to focus on opportunities to consolidate our position, drive profitable growth and deliver returns to our shareholders."

Third Quarter 2011 Unaudited Financial Results

Total revenues for the third quarter ended September 30, 2011 were RMB343.3 million (US$53.8 million), an increase of 26.4% from RMB271.6 million for the same quarter in 2010.

Online recruitment services revenues for the third quarter of 2011 were RMB212.7 million (US$33.4 million), representing a 49.0% increase from RMB142.7 million for the same quarter of the prior year.  The increase was primarily due to higher average revenue per unique employer as well as a greater number of unique employers using the Company's online recruitment services.  Average revenue per unique employer increased 27.9% in the third quarter of 2011 as compared to the same quarter in 2010 due to growing demand for online recruitment services and the impact of price increases implemented in April 2011.  Unique employers increased 16.5% to 165,572 in the third quarter of 2011 compared with 142,098 in the same quarter of the prior year driven by new customer acquisition and greater usage of online services.

Print advertising revenues for the third quarter of 2011 decreased 30.8% to RMB42.9 million (US$6.7 million) compared with RMB62.0 million for the same quarter in 2010.  The decline was primarily due to a reduction in the number of cities where 51job Weekly is published and a 38.3% decrease in the estimated number of print advertising pages generated in the third quarter of 2011 to 1,322 from 2,143 pages in the same quarter in 2010.  This decline was partially offset by higher average revenue per page.  Average revenue per page increased 12.1% in the third quarter of 2011 as compared to the same quarter in 2010 primarily as a result of greater page contribution from higher priced cities.

Other human resource related revenues for the third quarter of 2011 increased 31.0% to RMB87.6 million (US$13.7 million) from RMB66.9 million in the same quarter of 2010 primarily due to greater market demand for our business process outsourcing and training services.

Gross profit for the third quarter of 2011 increased 34.1% to RMB236.2 million (US$37.0 million) from RMB176.1 million for the same quarter of the prior year.  Gross margin, which is gross profit as a percentage of net revenues, expanded to 72.4% in the third quarter of 2011 compared with 68.4% in the same quarter in 2010 primarily due to greater economies of scale.

Operating expenses for the third quarter of 2011 increased 15.6% to RMB124.0 million (US$19.4 million) from RMB107.2 million for the same quarter of 2010.  Operating expenses as a percentage of net revenues decreased to 38.0% for the third quarter of 2011 compared with 41.6% for the third quarter of 2010.  Sales and marketing expenses for the third quarter of 2011 increased 20.0% to RMB82.2 million (US$12.9 million) from RMB68.5 million for the same quarter of the prior year primarily due to an increase in sales headcount and higher salary expenses, commissions and bonuses.  General and administrative expenses for the third quarter of 2011 increased 7.9% to RMB41.8 million (US$6.6 million) from RMB38.7 million in the third quarter of 2010 primarily due to higher share-based compensation, rental and office expenses.

Income from operations for the third quarter of 2011 increased 62.8% to RMB112.2 million (US$17.6 million) from RMB68.9 million for the same quarter of the prior year.  Operating margin, which is income from operations as a percentage of net revenues, increased to 34.4% in the third quarter of 2011 compared with 26.8% in the same quarter of 2010.

Net income for the third quarter of 2011 increased 54.9% to RMB97.5 million (US$15.3 million) from RMB62.9 million for the same quarter in 2010.  Fully diluted earnings per common share for the third quarter of 2011 were RMB1.65 (US$0.26) compared with RMB1.10 for the same quarter in 2010.  Fully diluted earnings per ADS for the third quarter of 2011 were RMB3.30 (US$0.52) compared with RMB2.20 in the third quarter of 2010.

In the third quarter of 2011, the Company recognized total share-based compensation expense of RMB11.2 million (US$1.8 million) compared with RMB6.4 million in the third quarter of 2010.  The Company also recognized loss from foreign currency translation of RMB2.9 million (US$0.5 million) in the third quarter of 2011 compared with RMB2.7 million in the third quarter of 2010 due to an appreciation of the Renminbi against the U.S. dollar.

Excluding share-based compensation expense and loss from foreign currency translation as well as their related tax impact, non-GAAP adjusted income for the third quarter of 2011 increased 54.9% to RMB111.6 million (US$17.5 million) compared with RMB72.0 million for the third quarter of 2010.  Non-GAAP adjusted fully diluted earnings per common share were RMB1.89 (US$0.30) in the third quarter of 2011 compared with RMB1.26 in the third quarter of 2010.  Non-GAAP adjusted fully diluted earnings per ADS in the third quarter of 2011 were RMB3.77 (US$0.59) compared with RMB2.52 in the third quarter of 2010.

Nine Months 2011 Unaudited Financial Results

Total revenues for the nine months ended September 30, 2011 were RMB1,000.3 million (US$156.8 million), an increase of 26.9% from RMB788.3 million for the same period in 2010.  Income from operations for the nine months ended September 30, 2011 increased 69.3% to RMB329.1 million (US$51.6 million) from RMB194.4 million for the same period in 2010.

Net income for the nine months ended September 30, 2011 increased 62.5% to RMB272.6 million (US$42.7 million) from RMB167.7 million for the same period in 2010.  Fully diluted earnings per common share for the nine months ended September 30, 2011 increased to RMB4.61 (US$0.72) from RMB2.99 for the same period in 2010.  Fully diluted earnings per ADS for the nine months ended September 30, 2011 were RMB9.22 (US$1.45) compared with RMB5.97 for the same period in 2010.

Excluding share-based compensation expense, loss from foreign currency translation and loss from impairment of long-term investments as well as their related tax impact, non-GAAP adjusted net income for the nine months ended September 30, 2011 increased 69.3% to RMB323.1 million (US$50.7 million) from RMB190.8 million for the nine months ended September 30, 2010.  Non-GAAP adjusted fully diluted earnings per common share were RMB5.46 (US$0.86) in the nine months of 2011 compared with RMB3.40 in the same period in 2010.  Non-GAAP adjusted fully diluted earnings per ADS in the nine months of 2011 were RMB10.93 (US$1.71) compared with RMB6.79 in the same period in 2010.

As of September 30, 2011, the Company had cash and short-term investments totaling RMB1,919.4 million (US$300.9 million) compared with RMB1,599.8 million as of December 31, 2010.  Short-term investments consist of certificates of deposit with original maturities from three months to one year.

Business Outlook

For the fourth quarter of 2011, based on current market and operating conditions, the Company's revenue target is in the estimated range of RMB360 million to RMB370 million (US$56.4 million to US$58.0 million).  Excluding share-based compensation expense and any loss or gain from foreign currency translation as well as their related tax impact, the Company's non-GAAP fully diluted earnings target for the fourth quarter of 2011 is in the estimated range of RMB1.85 to RMB1.95 per common share (US$0.58 to US$0.61 per ADS).  The Company expects aggregate share-based compensation expense in the fourth quarter of 2011 to be in the estimated range of RMB11 million to RMB12 million (US$1.7 million to US$1.9 million).

Other Company News

In October 2011, the Company discontinued the publication of 51job Weekly in Chongqing but continues to maintain a sales office in the city.  The Company currently operates 51job Weekly in 14 cities across China.

In November 2011, the Company entered into a contract to acquire a new office building in Wuhan to accommodate its growing sales and service team.  The purchase price is expected to be in the estimated range of RMB70 million to RMB73 million (US$11.0 million to US$11.4 million) and additional costs will be incurred to outfit and furnish the building for occupancy in 2013.  The Company expects to make installment payments toward the purchase of this building beginning in the fourth quarter of 2011.

Currency Convenience Translation

For the convenience of readers, certain Renminbi amounts have been translated into U.S. dollars at the rate of RMB6.3780 to US$1.00, the noon buying rate on September 30, 2011 in New York for cable transfers of Renminbi as set forth in the H.10 weekly statistical release of the Federal Reserve Board.

Conference Call Information

Management will hold a conference call at 8:00 p.m. Eastern Time on November 9, 2011 (9:00 a.m. Shanghai / Hong Kong time zone on November 10, 2011) to discuss its third quarter 2011 results, operating performance and business outlook.

To dial in to the call, please use conference ID 4481691 and the following telephone numbers:

US: +1-877-941-6009
Hong Kong: +852-3009-5027
International: +1-480-629-9722

The call will also be available live and on replay through 51job's investor relations website, ir.51job.com. Please go to the website at least fifteen minutes early to register or install any necessary audio software.

Use of Non-GAAP Financial Measures

To supplement the consolidated financial statements presented in accordance with United States Generally Accepted Accounting Principles (GAAP), 51job uses non-GAAP measures of income before income tax expense, income tax expense, adjusted net income, adjusted earnings per share and adjusted earnings per ADS, which are adjusted from results based on GAAP to exclude share-based compensation expense, loss from foreign currency translation and loss from impairment of long-term investments as well as their related tax impact.  The Company believes excluding share-based compensation expense and its related tax impact from its non-GAAP financial measures is useful for its management and investors to assess and analyze the Company's core operating results as such expense is not directly attributable to the underlying performance of the Company's business operations and do not impact its cash earnings. The Company believes excluding loss from foreign currency translation and its related tax impact from its non-GAAP financial measures is useful for its management and investors as such translation loss is not indicative of the Company's core business operations and will not result in cash settlement nor impact the Company's cash earnings. The Company believes excluding the loss from impairment of long-term investments and its related tax impact from its non-GAAP financial measures is useful for its management and investors as such loss is unrelated to the Company's core business operations.  51job also believes these non-GAAP measures excluding share-based compensation expense, loss from foreign currency translation and loss from impairment of long-term investments, as well as their related tax impact, are important in helping investors to understand the Company's current financial performance and future prospects and to compare business trends among different reporting periods on a consistent basis.  The presentation of these additional measures should not be considered a substitute for or superior to GAAP results or as being comparable to results reported or forecasted by other companies.  The non-GAAP measures have been reconciled to GAAP measures in the attached financial statements.

About 51job

51job, Inc. (Nasdaq: JOBS) is a leading provider of integrated human resource services in China with a strong focus on recruitment related services.  Through online recruitment services at www.51job.com and print advertisements in 51job Weekly, 51job enables enterprises to attract, identify and recruit employees and connects millions of job seekers with employment opportunities.  51job also provides a number of other value-added human resource services, including business process outsourcing, training, executive search and compensation and benefits analysis.  51job has a call center in Wuhan and a nationwide sales office network spanning 25 cities across China.

Safe Harbor Statement

Statements in this release regarding targets for the fourth quarter of 2011, future business and operating results constitute "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the Private Securities Litigation Reform Act of 1995. These statements are based upon management's current expectations, and actual results could differ materially.  Among the factors that could cause actual results to differ are the number of recruitment advertisements placed, sales orders received and customer contracts executed during the remaining weeks of the fourth quarter of 2011; any accounting adjustments that may occur during the quarterly close; fluctuations in the value of the Renminbi against the U.S. dollar and other currencies; behavioral and operational changes of customers in meeting their human resource needs as they respond to evolving social, economic and political changes in China as well as stock market volatilities; introduction by its competitors of new or enhanced products or services; price competition in the market for the various human resource services that the Company provides in China; acceptance of new products and services developed or introduced by the Company outside of the human resources industry and fluctuations in general economic conditions. For additional information on these and other factors that may affect the Company's financial results, please refer to the Company's filings with the Securities and Exchange Commission. 51job undertakes no obligation to update these targets prior to announcing final results for the fourth quarter of 2011 or as a result of new information, future events or otherwise.

Contact:

Rebecca Liu
Investor Relations
51job, Inc.
+(86-21) 6879-6250
ir@51job.com

51job, Inc.

Consolidated Statements of Operations



For the Three Months Ended


September 30,
2010


September 30,
2011


September 30,
2011


(unaudited)


(unaudited)


(unaudited)

(In thousands, except share, per share and per ADS data)







RMB


RMB


USD (Note 1)







Revenues:






   Online recruitment services

142,732


212,736


33,355

   Print advertising

62,017


42,900


6,726

   Other human resource related revenues

66,896


87,643


13,741

Total revenues

271,645


343,279


53,822







Less: Business and related tax

(14,148)


(17,234)


(2,702)

Net revenues

257,497


326,045


51,120







Cost of services (Note 2)

(81,383)


(89,863)


(14,089)







Gross profit

176,114


236,182


37,031







Operating expenses:






   Sales and marketing (Note 3)

(68,505)


(82,198)


(12,888)

   General and administrative (Note 4)

(38,705)


(41,780)


(6,551)

Total operating expenses

(107,210)


(123,978)


(19,439)







Income from operations

68,904


112,204


17,592

Loss from foreign currency translation

(2,723)


(2,900)


(455)

Interest and investment income

4,925


11,405


1,788

Other income (expense)

3,941


(124)


(19)







Income before income tax expense

75,047


120,585


18,906

Income tax expense

(12,103)


(23,081)


(3,619)







Net income

62,944


97,504


15,287







Earnings per share:






   Basic

1.13


1.72


0.27

   Diluted

1.10


1.65


0.26







Earnings per ADS (Note 5):






   Basic

2.27


3.43


0.54

   Diluted

2.20


3.30


0.52







Weighted average number of common shares outstanding:






   Basic

55,531,881


56,837,045


56,837,045

   Diluted

57,120,928


59,176,145


59,176,145



Notes:

  1. The conversion of RMB amounts into USD amounts is based on the noon buying rate of USD1.00=RM6.3780 on September 30, 2011 in New York for cable transfers of RMB as set forth in the H.10 weekly statistical release of the Federal Reserve Board.
  2. Includes share-based compensation expense of RMB1,019 and RMB1,790 (US$281) for the three months ended September 30, 2010 and 2011, respectively.
  3. Includes share-based compensation expense of RMB876 and RMB1,539 (US$241) for the three months ended September 30, 2010 and 2011, respectively.
  4. Includes share-based compensation expense of RMB4,466 and RMB7,844 (US$1,230) for the three months ended September 30, 2010 and 2011, respectively.
  5. Each ADS represents two common shares.

51job, Inc.

Consolidated Statements of Operations



For the Nine Months Ended


September 30,
2010


September 30,
2011


September 30,
2011


(unaudited)


(unaudited)


(unaudited)

(In thousands, except share, per share and per ADS data)







RMB


RMB


USD (Note 1)







Revenues:






   Online recruitment services

387,075


586,067


91,889

   Print advertising

226,126


181,090


28,393

   Other human resource related revenues

175,091


233,109


36,549

Total revenues

788,292


1,000,266


156,831







Less: Business and related tax

(41,684)


(52,999)


(8,310)

Net revenues

746,608


947,267


148,521







Cost of services (Note 2)

(246,924)


(269,017)


(42,179)







Gross profit

499,684


678,250


106,342







Operating expenses:






   Sales and marketing (Note 3)

(193,159)


(231,541)


(36,303)

   General and administrative (Note 4)

(112,088)


(117,574)


(18,434)

Total operating expenses

(305,247)


(349,115)


(54,737)







Income from operations

194,437


329,135


51,605

Loss from foreign currency translation

(3,836)


(8,442)


(1,324)

Loss from impairment of long-term investments


(15,081)


(2,365)

Interest and investment income

13,675


30,122


4,723

Other income

6,637


3,412


535







Income before provision for income tax

210,913


339,146


53,174

Income tax expense

(43,199)


(66,568)


(10,437)







Net income

167,714


272,578


42,737







Earnings per share:






   Basic

3.04


4.81


0.75

   Diluted

2.99


4.61


0.72







Earnings per ADS (Note 5):






   Basic

6.07


9.62


1.51

   Diluted

5.97


9.22


1.45







Weighted average number of common shares outstanding:






   Basic

55,235,509


56,690,804


56,690,804

   Diluted

56,165,307


59,121,853


59,121,853



Notes:

  1. The conversion of RMB amounts into USD amounts is based on the noon buying rate of USD1.00=RMB6.3780 on September 30, 2011 in New York for cable transfers of RMB as set forth in the H.10 weekly statistical release of the Federal Reserve Board.
  2. Includes share-based compensation expense of RMB3,082 and RMB4,330 (US$679) for the nine months ended September 30, 2010 and 2011, respectively.
  3. Includes share-based compensation expense of RMB2,650 and RMB3,722 (US$584) for the nine months ended September 30, 2010 and 2011, respectively.
  4. Includes share-based compensation expense of RMB13,508 and RMB18,971 (US$2,974) for the nine months ended September 30, 2010 and 2011, respectively.
  5. Each ADS represents two common shares.

51job, Inc.

Reconciliation of GAAP and Non-GAAP Results



For the Three Months Ended


September 30,
2010


September 30,
2011


September 30,
2011


(unaudited)


(unaudited)


(unaudited)

(In thousands, except share, per share and per ADS data)







RMB


RMB


USD (Note 1)







GAAP income before income tax expense

75,047


120,585


18,906

Add back: Share-based compensation expense

6,361


11,173


1,752

Add back: Loss from foreign currency translation

2,723


2,900


455

Non-GAAP income before income tax expense

84,131


134,658


21,113







GAAP income tax expense

(12,103)


(23,081)


(3,619)

Tax impact of share-based compensation expense and loss






   from foreign currency translation

(4)


(6)


(1)

Non-GAAP income tax expense

(12,107)


(23,087)


(3,620)







Non-GAAP adjusted net income

72,024


111,571


17,493







Non-GAAP adjusted earnings per share:






   Basic

1.30


1.96


0.31

   Diluted

1.26


1.89


0.30







Non-GAAP adjusted earnings per ADS (Note 2):






   Basic

2.59


3.93


0.62

   Diluted

2.52


3.77


0.59







Weighted average number of common shares outstanding:






   Basic

55,531,881


56,837,045


56,837,045

   Diluted

57,120,928


59,176,145


59,176,145








For the Nine Months Ended


September 30,
2010


September 30,
2011


September 30,
2011


(unaudited)


(unaudited)


(unaudited)

(In thousands, except share, per share and per ADS data)







RMB


RMB


USD (Note 1)







GAAP income before income tax expense

210,913


339,146


53,174

Add back: Share-based compensation expense

19,240


27,023


4,237

Add back: Loss from foreign currency translation

3,836


8,442


1,324

Add back: Loss from impairment of long-term investments


15,081


2,365

Non-GAAP income before income tax expense

233,989


389,692


61,100







GAAP income tax expense

(43,199)


(66,568)


(10,437)

Tax impact of share-based compensation expense, loss from






   foreign currency translation and loss from impairment of






   long-term investments

(7)


(48)


(8)

Non-GAAP income tax expense

(43,206)


(66,616)


(10,445)







Non-GAAP adjusted net income

190,783


323,076


50,655







Non-GAAP adjusted earnings per share:






   Basic

3.45


5.70


0.89

   Diluted

3.40


5.46


0.86







Non-GAAP adjusted earnings per ADS (Note 2):






   Basic

6.91


11.40


1.79

   Diluted

6.79


10.93


1.71







Weighted average number of common shares outstanding:






   Basic

55,235,509


56,690,804


56,690,804

   Diluted

56,165,307


59,121,853


59,121,853



Notes:

  1. The conversion of RMB amounts into USD amounts is based on the noon buying rate of USD1.00=RMB6.3780 on September 30, 2011 in New York for cable transfers of RMB as set forth in the H.10 weekly statistical release of the Federal Reserve Board.
  2. Each ADS represents two common shares.

51job, Inc.

Consolidated Balance Sheets



As of


December 31,


September 30,


September 30,


2010


2011


2011

(In thousands, except share and per share data)

(unaudited)


(unaudited)


(unaudited)


RMB


RMB


USD (Note 1)







ASSETS












Current assets:






   Cash

1,192,888


752,522


117,987

   Restricted cash

44,888


15,936


2,499

   Short-term investments

406,943


1,166,882


182,954

   Accounts receivable (net of allowance of RMB1,965 and
     RMB1,454 as of December 31, 2010 and
     September 30, 2011, respectively)

33,386


34,433


5,399

   Prepayments and other current assets

75,256


212,930


33,385

   Deferred tax assets, current

6,749


5,913


927







Total current assets

1,760,110


2,188,616


343,151







Long-term investments, net

15,433



Property and equipment, net

202,699


193,122


30,279

Intangible assets, net

4,805


4,585


719

Other long-term assets

4,853


7,081


1,110

Deferred tax assets, non-current

110


542


85







Total non-current assets

227,900


205,330


32,193







Total assets

1,988,010


2,393,946


375,344







LIABILITIES












Current liabilities:






   Accounts payable

15,551


15,797


2,477

   Salary and employee related accrual

39,543


37,985


5,955

   Taxes payable

39,795


33,351


5,229

   Advance from customers

186,191


290,931


45,615

   Other payables and accruals

50,491


35,888


5,627







Total current liabilities

331,571


413,952


64,903







Deferred tax liabilities, non-current

1,583


1,874


294







Total liabilities

333,154


415,826


65,197







Shareholders’ equity:






   Common shares (US$0.0001 par value; 500,000,000 shares
     authorized, 56,473,949 and 56,932,105 shares issued and
     outstanding as of December 31, 2010 and
     September 30, 2011, respectively)

47


47


7

   Additional paid-in capital

997,933


1,048,329


164,367

   Statutory reserves

6,811


6,811


1,068

   Other comprehensive income

1,313


1,603


251

   Retained earnings

648,752


921,330


144,454







Total shareholders’ equity

1,654,856


1,978,120


310,147







Total liabilities and shareholders’ equity

1,988,010


2,393,946


375,344



Note 1:

The conversion of RMB amounts into USD amounts is based on the noon buying rate of USD1.00=RMB6.3780 on September 30, 2011 in New York for cable transfers of RMB as set forth in the H.10 weekly statistical release of the Federal Reserve Board.

SOURCE 51job, Inc.